Walter Bowen

Real Estate Agency

Home - News - Costs


Posted on January 12, 2011 in News

However, if the market is ripe hiciese, and was equivalent to that of yogurt today, competition would throw those prices down. And notice that I am not speaking here for any of the costs of production, simply a question of what stage the market is located. Therefore, in addition to costs, margins and competition, the company must ask what value the customer perceives that product in this format, in that location … Sometimes, if possible, it is appropriate to conduct a market survey to know how much they would pay customers for one such device. For example, the prestigious brand Lacoste started in the United States with prices below forty dollars, to fight the stiff competition that was there. But low margins that had made him lose its quality, which sales fell, which drove him to further reduce their prices … in 2001, gave a change to its policy and prices rose to more than seventy dollars, increasing its sales by 125%, and becoming a product image of exclusivity, as in Europe. When considering the cost must also be taken into account the cost structure, ie the ratio of fixed costs (not dependent on the production and / or sales) and variables, and marginal costs (to sell one more unit).

For example, chartered a bus with 50 televisions, and that carriage is worth me 500 euros, the cost of such transport is 10 euros per television. However, if you want to send an additional TV, no longer fits in my truck, I have to order an additional service that costs me 50 euros, and by a single TV! (Marginal cost). Another example is the carriers, which offer last minute deals. Why? For them, the cost of travel is about the same whether the plane carried 190 or 200 passengers. Therefore, to fill to its maximum capacity available, can perform this type of offers (would be better also for hotels, for example). A classic case of differentiation is offered by the no less classic Coca-Cola. Although the cost of production and distribution may be similar, it costs the same in Mexico than in Spain, for example. But even more, if I buy in the same city a can of 33 cl in a hypermarket, a neighborhood store, buy it in automatic, or ask at a restaurant, I am willing to pay different prices without any problem. Thus, in the hyper can cost me 0.80 and be like a high price, and yet at the restaurant I can pay 1.50, and think it is cheap!